Canadian PayPal customers can now pay their income tax via their bank account, credit card, Visa debit card or PayPal balance.
According to MoneySense, while it will be necessary to pay a fee for the privilege of using a third party site or credit card to pay taxes, it is likely to prove a fast, simple and secure means of doing so. Unique personal IDs are created at the time of payment and are stored by PayPal. The approach is also expected to appeal to one of the 2.8 million Canadian citizens living abroad.
But certified financial planner Janet Gray warned: "As a general rule, everyone should avoid paying taxes with credit cards — even if you have the money to pay off the card when the bill arrives."
It also makes sense to avoid third-party payment providers due to the 2.29% to 2.5% in fees that such companies generally charge on balances that are paid to the Canada Revenue Agency (CRA).
If, for example, an individual taxpayer owes CA$5,000 (US$3,857) in taxes and uses their credit card with a 2% cash-back reward to pay, they would receive $100 (US$77) in cash rewards for using their card. But if the fee was 2.29%, they would be charged $114.50 (US$88), which would make them $14.50 (US$11) down.
The CRA holds regular fairness hearings, and taxpayers can file an RC4288 Request for Taxpayer Relief if they are on a debt reduction program with a counsellor, have a very low income or have experienced a one-off hardship as a result of medical issues. The CRA often removes the 1% per month interest rate it charges on late taxes.
Taxpayers also have the option to register for MyAccount, a free electronic payment service offered by the CRA by going to their MyCRA account.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
Canadian PayPal customers can now pay their income tax via their bank account, credit card, Visa debit card or PayPal balance.
According to MoneySense, while it will be necessary to pay a fee for the privilege of using a third party site or credit card to pay taxes, it is likely to prove a fast, simple and secure means of doing so. Unique personal IDs are created at the time of payment and are stored by PayPal. The approach is also expected to appeal to one of the 2.8 million Canadian citizens living abroad.
But certified financial planner Janet Gray warned: "As a general rule, everyone should avoid paying taxes with credit cards — even if you have the money to pay off the card when the bill arrives."
It also makes sense to avoid third-party payment providers due to the 2.29% to 2.5% in fees that such companies generally charge on balances that are paid to the Canada Revenue Agency (CRA).
If, for example, an individual taxpayer owes CA$5,000 (US$3,857) in taxes and uses their credit card with a 2% cash-back reward to pay, they would receive $100 (US$77) in cash rewards for using their card. But if the fee was 2.29%, they would be charged $114.50 (US$88), which would make them $14.50 (US$11) down.
The CRA holds regular fairness hearings, and taxpayers can file an RC4288 Request for Taxpayer Relief if they are on a debt reduction program with a counsellor, have a very low income or have experienced a one-off hardship as a result of medical issues. The CRA often removes the 1% per month interest rate it charges on late taxes.
Taxpayers also have the option to register for MyAccount, a free electronic payment service offered by the CRA by going to their MyCRA account.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.